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Category Archives: Italy

BERLIN/ROME/BEIJING (Own repot) – The West’s power struggle against China is provoking new tensions between Germany and Italy. According to reports published last week, the Italian government plans to conclude a cooperation agreement with Beijing within the framework of the “New Silk Road” (Belt and Road Initiative, BRI) to benefit from Chinese investments in Italy’s infrastructure, e.g. the Trieste port and Italy’s power grid. China has already invested in several of the EU’s periphery countries, heavily affected by Berlin’s austerity dictate – such as Greece and Portugal – which gladly welcome these investments as relief. The German government is now beginning to make moves against this. Berlin seeks to prevent the People’s Republic of China from increasing its influence within the EU and fears inner-European resistance if it takes aggressive action against its East Asian rival. Fierce debates are expected at the EU summit at the end of next week and at the EU-China summit on April 9. Continue reading →

In a world in which most western liberal democracies are slamming Trump for demanding a wall be built on the US southern border to prevent illegal immigrants from entering the US, Europe is about to erect a metaphorical wall targeting legal US travelers, because starting in 2021, U.S. citizens will need a visa to visit most European countries.

“Similar to other countries and regions in the world Europe has recently decided to improve their security level to avoid any further problems with illegal migration and terrorism,” the EU said. Continue reading →

Louis Gave at Gavekal Research says the greatest source of potential instability in the years ahead lies with the massive growth of the U.S. corporate debt market, particularly at the BBB-rated (near junk) level. Continue reading →

BERLIN/LONDON/PARIS/ROME (Own report) – London’s government crisis escalated yesterday under the pressure of Berlin and the EU’s unaccomplishable Brexit requirements. Prime Minster Theresa May has barely survived a vote of confidence, which was ultimately triggered by the so-called backstop. Brussels insists on a regulation, which could indefinitely subjugate Great Britain to a customs union, without an option for a unilateral withdrawal and erect a trade border between two areas of the United Kingdom. These provisions are in Germany’s interests, but they will plunge Great Britain into chaos. The current government crisis in France is largely due to the austerity programs imposed by Berlin on Paris – while refusing to make any concessions at the EU level. In France and Great Britain, the extreme right is profiting, like in Italy, where Berlin’s drastic austerity dictates, have already crushed the traditional political establishment.

Over the last couple of years, the main challenge to EU cohesion has been Brexit, with the media sharply focused on the negotiations and all relevant developments. Since the release of the draft withdrawal agreement, largely perceived as a victory for the EU, those who support the European project and believe in a strong leadership from Brussels have projected confidence and optimism for the future. According to these voices, the divisions caused by the rise of nationalism and populism in the past years are healing, the relationship between member states is normalizing, while a future of stability and harmony awaits.

However, such a vision might prove naive, as it discounts a much greater risk to the EU than Brexit ever was: the political and economic powder keg that is Italy. Continue reading →

G7 foreign ministers release their own statement of condemnation against the Kremlin.

In an interview with Reuters today, German politician Annegret Kramp-Karrenbauer, the Christian Democratic Union leadership front-runner and protege of Chancellor Angela Merkel, said the European Union and U.S. should consider a full blockade of all Russian vessels at their ports in response to the Kerch Strait incident. Continue reading →

EU defence and foreign ministers have agreed to create a joint intelligence training school and to develop new hardware, including drones and electronic warfare technology, as part of plans for what could one day be an “EU army”.

The “Joint EU Intelligence School” will “provide education and training in intelligence disciplines and other specific fields to EU member states intelligence personnel”, the EU Council said in a press release after ministers met in Brussels on Monday (19 November).

The project is to be led by Cyprus and Greece – two traditionally Russia-friendly states – at a time of heightened tension over Russian espionage operations in Europe and the Western Balkans, including assassination attempts in the UK and in Montenegro.

The EU foreign service already has a joint intelligence capability called IntCen. Continue reading →

The eurozone could not borrow from the momentum of the U.S. economy in the third quarter as economic growth slumped to a tepid 0.2% , the slowest rate in more than four years. With the 19-nation currency bloc beginning to stagnate, and the heavyweights failing to post significant gains, Brussels is in panic mode, likely leaning on the European Central Bank (ECB) for further stimulus.

Economists originally anticipated growth of 0.4%. But global trade woes, tumbling business confidence, Italian distress, and the gradual dissipation of an accommodative monetary policy all contributed to the poor numbers in the July-September period. Continue reading →

BERLIN (Own report) – In view of the conflict between Brussels and Rome over Italy’s national budget, the German establishment is increasing its demands to resolutely fight the “internal enemies” of the EU. The Union must “now be vigorously defended,” wrote a leading German daily. The Italian government coalition is “not worth risking the country’s fate.” The Italian government is being put into question, because it refuses to continue to submit to German austerity dictates. Berlin’s dominance over the EU is also being met with mounting protests in other member countries. Poland and Hungary are not the only countries, where controversies are intensifying. Anger at Berlin is also growing in France. Jean-Luc Mélenchon, the founder of “La France insoumise,” who, with almost 20 percent, barely missed making the run-offs in the 2017 presidential elections, has now called for “France to withdraw from all EU treaties.” The German elite’s reaction is becoming more hostile.

ROME/BERLIN (Own report) – German politicians and media are intensifying pressure on Rome in anticipation of today’s EU Commission verdict on Italy’s national budget. Already last week, EU Budget Commissioner Günther Oettinger announced, in reference to the Italian deficit, that the Italian government must “correct” its draft budget. Media reports refer to a “black week” for Rome. Negative reporting – like rating agencies’ devaluation of Italy’s creditworthiness – can contribute to the destabilization of Italy’s financial and credit markets. The country’s current downward spiral threatens to re-escalate the banking crisis. Whereas Berlin insists that the EU take sharp measures against deficits, Germany’s Finance Minister at the time, Wolfgang Schäuble had prevented the EU Commission from taking measures against excessive surpluses, which the commission sees as potentially just as destabilizing. Germany has been achieving these surpluses year after year.

If there were ever any doubts that the leaders of the Euroskeptic coalition that now runs Italy has a plan to defy the European Union its proposed budget should quell them. Both Deputy Prime Ministers, Luigi Di Maio of Five Star Movement and Matteo Salvini of The League, were adamant about locking horns with European Union leadership over all issues of sovereignty between now and May’s European Parliamentary elections.

Their budget proposal which included both tax cuts and universal income blew past the EU budget limit of 2.0% of GDP, coming in at 2.4%. It has put their Finance Minister, Giovanni Tria, in a difficult position because Tria doesn’t want to negotiate this budget with Brussels, preferring a less confrontational, read more pro-EU, approach. Continue reading →

The European Central Bank (ECB) will aid Italy with an EU rescue program if the country or its banks are in financial turmoil because they are taking the view that Italy has become an “occupied” country and that Germany has conquered Europe imposing austerity and its view of inflation upon the whole of Europe without firing a shot. While the spin is that the ECB is making Italy a test case to demonstrate that Europe and its mechanisms work, in reality, it is a realization that the ECB cannot save Italy’s financial institutions because austerity has created the greatest economic depression perhaps in economic history. Continue reading →

With the Washington Post stepping up to put a floor under US stocks Thursday afternoon by reporting that President Trump would meet Chinese President Xi Jinping at next month’s G-20 summit (while the headline soothed the market, it doesn’t change the fact that, as with everything involving the Trump administration, this too remains subject to change), investors have apparently overlooked the latest ominous headlines out of Italy. To wit, Reuters reported that the ECB won’t come to Italy’s rescue if its government or banks run out of cash unless the Italian government first secures a bailout from the European Union. Of course, this would almost certainly require that the populist coalition end its ongoing game of fiscal chicken with Brussels and abandon its dreams of lowering the retirement age and extending a basic income to the Italian people – policies that would effectively secure a political future for M5S and the League.

In effect, the ECB’s latest trial balloon is tantamount to blackmail: Either the Italians agree to fall back in line and obey European budgetary guidelines, or the central bank will sit back and watch as bond yields surge, providing the ratings agencies even more ammunition to cut Italian debt to junk – effectively guaranteeing a Greece-style banking crisis as the liquidity taps are turned off.Continue reading →

A little more than one year after becoming the first “far-right” party to win seats in the Bundestag in more than 50 years, the AfD is now officially the opposition to Merkel’s “grand coalition,” which required alliances with not only Bavaria’s Christian Social Union and the Social Democratic Party to hold a majority of seats. A new poll has placed AfD one point ahead of the SDP in terms of generic support. Continue reading →